An animal is most dangerous when cornered, as are politicians facing tough re-election campaigns if we’re to judge by reports that Sen. Dean Heller, R-Nevada, is preparing legislation to prevent the electric vehicle tax credit from phasing out as intended. The Republican majority is certainly in jeopardy as the GOP faces a daunting election environment, but that shouldn’t become an excuse for embracing corporate handouts.
Along with a lot of other wasteful spending, the package of bills passed in response to the financial crisis in 2008 provided purchasers of electric passenger vehicles with up to $7,500 in federal tax benefits, and many states have subsequently added more benefits. Initially, the credit applied only to the first 250,000 electric vehicles, but as part of the Obama stimulus it was expanded to cover the first 200,000 vehicles for each manufacturer.
But now even that limitation is in jeopardy and, as so often is the case, a government program intended to last a limited time is in danger of being extended into perpetuity. That the effort might be carried out under the watch of the party claiming to prefer smaller government merely adds insult to injury.
Heller’s reason for pursuing the issue is obvious. Tesla’s Gigafactory 1, which manufactures lithium-ion batteries, is in Nevada, and Tesla has just crossed the 200,000 EV threshold. Tax benefits for Tesla customers will be phasing out over the next year, and that will obviously be bad for Tesla’s bottom line.
Keeping the gravy flowing to in-state businesses is probably good politics for a senator in a close election. And for Republicans as a whole, anything that helps keep a colleague in office could be the difference between keeping their congressional majority or watching Democrats take power after November’s election.
Unfortunately, EV tax credits aren’t similarly good as policy. Instead, they represent one of many policies that subsidize the wealthy at the expense of the lower and middle classes.
Recent research by Dr. Wayne Winegarden of the Pacific Research Institute shows that 79 percent of EV tax credits were claimed by households with adjusted gross incomes greater than $100,000. Asking struggling Americans to subsidize the lifestyles of America’s wealthiest is perverse at any time, but it’s particularly egregious to continue doing so when the national debt just hit $21 trillion.
Voters also shouldn’t be fooled by the promise of large environmental benefits. Modern internal combustion engines emit very little pollution compared to older models. Electric vehicles are also only as clean as the electricity that powers them, which in the United States primarily comes from fossil fuels. And since all personal vehicles in the United States account for approximately 3 percent of global greenhouse gas emissions, even an influx of electric vehicles into the market would have a negligible effect on potential climate change, not that Americans are flocking to electrics even with the tax incentives in place.
But ultimately this is not about whether electric or internal combustion engines are better. The issue should be whether politicians or consumers are best situated to render that judgment.
Once all the myths are stripped away, the only reason left for extending EV tax credits is electoral advancement through corporate welfare. But while sacrificing their principles to support corporate handouts, and despite the cost to taxpayers, in the hopes of preserving a vulnerable Senate seat might seem a fair bargain for Republicans. If they did a better job of matching their rhetoric with actual fiscal discipline, then they probably wouldn’t be facing such an electoral backlash in the first place.